Robert Scollay University of Auckland Pacific Island Countries in the World Trading System: How the Spread of FTAs Changes the Game Robert Scollay University of Auckland

Rapid Spread of FTAs * major feature - of world trading system since 1990s - in Asia-Pacific region since 2000

The Asia-Pacific “noodle bowl” CAFTA-DR Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua & Dominican Republic SAFTA Bangkok Bhutan Nepal Maldives Pakistan Bangladesh Sri Lanka India APEC NAFTA ASEAN + 6 (CEPEA) United States Canada Mexico ASEAN + 3 (EAFTA) Peru Northeast Asian China, Korea Japan ANZCERTA Chile ASEAN (AFTA) Brunei Philippines Vietnam Malaysia Thailand Singapore Indonesia Australia New Zealand Laos Cambodia Myanmar Source: Inter-American Development Bank

Spreading FTAs as a Game-Changer Before small poor countries have specially advantaged access to markets of major developed country partners – generally on lenient terms ACP-EU (Lome, Cotonou) PICs-ANZ (SPARTECA) concerns over preference erosion focused mainly on impact of multilateral liberalisation in GATT/WTO relatively slow moving

Spreading FTAs as a Game-Changer After small, poor countries (e.g. PICs) sharing “special access” with a growing range of other FTA partners accelerated pace of preference erosion in key markets other FTA partners may have better access in some respects e.g. rules of origin increasingly disadvantaged in markets where they lack “special access” especially East Asia FTAs based on developed country rules increasingly needed to maintain existing market access e.g. EPA, PACER-Plus reciprocity “substantially all trade”

Other WTO Members Other WTO Members Australia New Zealand PICs (SPARTECA) USA (A) China (NZ) Indonesia, Thailand, Malaysia, Philippines, Viet Nam, Singapore, other ASEAN, Chile, All LDCs Korea? Japan? India? Peru? Australia New Zealand PICs (SPARTECA)

PICs Other WTO Members PICS Other WTO Members Japan Indonesia, Thailand, Malaysia, Philippines, Viet Nam, Singapore, other ASEAN, Chile, Mexico India? Korea? China? Japan

Questions for PICs where should PICs concentrate their trade negotiating resources? what strategy for PACER-Plus? East Asia? North America? implications for policy on import barriers?

Diverse Needs of PICs Scope for Customising FTAs Diversity among PICs in proportion of foreign exchange earnings derived from export of goods tourism and other services remittances (based on movement of people) development assistance FTAs can be designed to address PIC interests in all of these areas precedents elsewhere implications for PACER-Plus FTA serving PIC interests must cover all of these areas bargaining issues

Capacity-Building for Trade The Potential Importance of Aid for Trade Long history in GATT/WTO of recognition but little action on need for capacity-building assistance to meet obligations under new agreements take advantage of export opportunities under new agreements “Aid for Trade (AfT) proposed as “circuit-breaker” Implementation remains problematic Regional Trade Facilitation Programme (RTFP) under PACER provided some useful assistance to PICs focused more on facilitating imports need balancing assistance with export capacity Application to FTAs e.g. PACER-Plus identify areas of need to be addressed technology/expertise to meet ANZ biosecurity requirements? infrastructure to link production with export ports?